Why not talk to one of the mortgage brokers that post here first?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
@derek: The JDL Fee is as follows:
Commission $8700
GST $870
Less Initial Payment $880 (the joining fee)
so in total is $8690Which will be counted as “costs” for the purchase of the property investment and financed as such. THerefore I do not need to pay upfront with cash in order to proceed (because it is capitalized on top of the loan so they said that it is Tax deductible fully)
in details, the fee is for preparing and arranging the following items:
1. Final Reports before the hand over.
2. Full depreciation schedule
3. Property research and negotiations
4. Full inclusions list
5. Plans
6. Liaising with builders (if this is new property).
7. Bank and Solicitors on my behalf
8. Meetings and strategy development on behalf of the JDL team.Hi Henry,
Thanks for that additional information.
Looks like some of those services are listed to 'pad out' the fee.
A typical contract, which is drawn up by the vendor will include a detailed inclusions list and plans. If this is a house and land package you will be supplied with detailed drawings and details at time of signing.
Bank and solicitor liaison is relatively simple – not an onerous task really. You may find there is a fee payable to the solicitor on top of the fees payable to JDL. Check this out.
When they right a loan all good brokers understand they will need to liaise between the bank and client. This service is par for course and not unusual.
Do you know what the proposed loan structure is? Like Terry, I recommend you get an independent broker to look at the proposed loan structure to make sure it suits you. There are countless threads in the finance forum which explain, in part, what a good loan structure could look like. Suggest you look for this too.
As an investor it is important you really know what is happening here.
See how you go.
Capitalising into the loan doesn't make a fee deductible, but it would make interest on the fee could be deductible.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Yes that is true Derek, maybe I should bring the printed out strategy report from the JDL strategies to the other mortgage broker to see if they can perform better (hopefully it shouldn’t offend any people involved).
Here’s the additional Fees and Disbursements that I must pay on top of that $8500 (this comes from the jdlfinanceaustralia.com.au Finance manager):
Application Fee (Override: No) $0.00
Loan Stamp Duty (Override: No)
Lender Mortgage Insurance (Override: No) $0.00
Extra Valuation Fee $220.00
Split Loan Fees (Override: No) $0.00
Mortgage Registration $232.00Property Fees (Override: No) $14,827.10
Conveyancing Fee $1,500.00
Title Transfer Stamp Duty $12,525.00
Transfer Fee $802.10
Total Fees (including Mortgage Registration) $15,279.10Looks like your loans may be cross collateralised.
The conveyancing fee is not cheap. Extra valuation fee -probably because they are valuing your other property to use it as security.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw wrote:Looks like your loans may be cross collateralised.The conveyancing fee is not cheap. Extra valuation fee -probably because they are valuing your other property to use it as security.
Yes, you’re right, I’m with Bankwest here at the moment and JDL Finance Australia Pty Ltd (ACL# 388885) suggest to me that I must be with Bankwest for 95% Interest only loan with my used to be PPOR and now I rented out as the security (they said that this is semi firewalling in the separate facilities).
Hi Henry,
Do you know what your overall LVR will be after both properties have been purchased (assuming you go through with things)?
Reason I ask is that I am not sure a high LVR across a whole portfolio is a wise strategy at the moment. N.B. I have no problem with maximising LVRs on individual purchases but across the whole portfolio doesn't give you much wriggle room if things go awry.
Been a while since I looked at the Coomera market but the Goldcoast and surrounds has struggled. a fair bit in recent months and any decline in values exposes you to additional risk.
As a matter of interest which state do you live in? Just curious that's all.
Derek, many thanks for the quick reply I am in NSW
So in particular here’s the details:
Funds Required
Property Purchase Amt $420,000.00
Total Fees $15,279.10
Refinance Amount $0.00
Total Funds Required $435,279.10Funds Available
Cash Deposit $79,000.00
FHB Grant $0.00
Proposed Loan Amt $408,500.00
Total Funds Available $487,500.00LVR 54.83%
Surplus $52,220.90Lender : BankWest
Product Name: Premium Select Home Loan $200k – $750k (>75% LVR)
Proposed Loan Amount: $408500.00
Variable Rate 6.95%
Intro/Fixed Rate 0.00%
Assessment Rate 8.90%
Repayment Type Interest Only
Actual Repayment (monthly) $2365.90
Assessment Repayment (monthly) $3029.71
Term 30many thanks once again for the suggestion Derek
Henry
This is all confusing.
Do you have another property? From the above post it seems that your new property will be stand alone, and not cross collateralised, which is good (and probably what they mean by firewalling). But you haven't taken into account LMI.
The LMI on a 95% loan will be huge. It may be included into the loan, ie capitalised so you are not paying up front, but it is still a cost you must pay for.
Also it is not a good idea to use cash if you have another property loan with non deductible debt. ie do you have a PPOR now which you are living in or are you renting.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terry,
thanks for the reply, yes I do have my PPOR which is now rented out so it becomes my IP (now I’m renting myself in Sydney)
and in the process to buy my second IP which is suggested by JDL in Coomera.Hi Henry,
Like Terry I am confused – one of your earlier posts indciated this loan was to be 95% and yet the numbers above show your cash despoit being $79K.
Where is the cash coming from? Another LOC on your other property or real cash?
As Terry said you are better off retaining your cash (if it is real cash) and placing it in an offset account. At this stage of the property cycle it is important to retain some reserves in case things go awry.
Happy to chat through this whole scenario with you if you like (guaranteeed no strings attached) – drop me a PM and I'll send you my mobile no.
Derek
What are the chances of you going back to live in your PPOR or to buy another?
I am asking this as if you use your cash for the investment properties then you will have less left over for the private expense of your ow home and therefore will be paying more interest which will not be deductible.
Does your old PPOR have any equity which you could use to borrow against?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
The chance is very minimal or impossible as it resides in Regional NSW area and with my current old PPOR luckily has gained enough equity so that I can withdraw $79k for the cash deposit.
in regards to the LMI yes, thanks for the spot on Terry, I didn’t see it how much does that cost me in the above report, but when I ask for the 90% the JDL finance manager told me that I’ll be left with no cash buffer to live with.
Ah, so the $79k is really borrowings!
Make sure you don't actually withdraw that money and place it in a savings account, or the interest on it may not be deductible. Take it straight from the loan and pay it.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Henry,
It is starting to make more sense now.
So the $79K will be borrowed money (redraw or line of credit). Is this correct?
If so, do you know if the interest costs on $79K has been factored into any cashflow projections?
$79K @ 7% has an annual interest bill of around $5500 or an extra $105/week.
@terry and Derek: from my printed out report, it seems that the 79k comes out from my existing mortgage account (with redraw facility) as it has good equity in my account so I’ll leave the remaining $7-6k in my old mortgage account to service the new loan, so I assume no interest is earned from this $79k as it will go straight into the new loan account with Bankwest.
But when you take the $79k out the interest on your loan goes up. You need to factor this in as the $79k is borrowings.
You also need to be very careful about how you take the $79k out.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw wrote:But when you take the $79k out the interest on your loan goes up. You need to factor this in as the $79k is borrowings.You also need to be very careful about how you take the $79k out.
ah yes, the interest from the initial account that I accrued i assume is now tax deductible as the property is now IP not my PPOR anymore.
Hi Henry,
I'll ask!
Why are you so committed to this property, which you haven't seen?
In this thread https://www.propertyinvesting.com/forums/property-investing/help-needed/4331128 others raised concerns about the purchase price and in this thread Terry and I (and others) have raised issues that woudl give me cause for consternation if I was in your shoes.
Is it the $880 that is keeping you 'in' or have you signed a contract and the cooling off period has expired?
Sorry to be abrupt – but that is my nature – but I figured someone needed to ask the question.
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